This screenshot made Oct. 10, 2012, shows EBay's redesigned website meant to encourage visitors to browse and collect items they might want to buy later with something it calls the feed. The feature, reminiscent of popular sites like image-heavy Pinterest, shows users items based on things they purchased in the past or items they ve clicked on the site. Shoppers can also edit their feed by adding or removing categories and individual items. (AP Photo/Ebay)

eBay (EBAY) has been quietly testing an online marketplace for deals on local services, expanding into a multibillion- dollar market currently led by Groupon.

The San Jose company is also redesigning its website, adding Facebook-like features it hopes will spur more sales.

Called eBay Lifestyle Deals, the offers are being run in a limited number of urban areas, including the Bay Area, Los Angeles and Washington D.C., according to the company.

Recent deals included $12 for a one-hour dog-walking service worth $25; $50 for a month of Yoga classes worth $110; and $180 for six private gym sessions worth $360.

"This is more competition for Groupon, but also more validation for Groupon's business," said Arvind Bhatia, an analyst at Sterne, Agree & Leach. "The market opportunity is big -- that's why you have Google (GOOG), Amazon and now eBay committing themselves."

Groupon shares were down nearly 4 percent to $5.07 in afternoon trading.

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The move is potentially a big step for eBay, which has traditionally focused on products rather than services. eBay has run daily deals on physical products for about two years, but this is its first foray into discounted local services in the United States.

"We have a big marketplace and a lot of people who come to eBay don't just come for one thing -- they stay and buy across categories," Devin Wenig, president of eBay Marketplaces, told Reuters in an interview.

"It makes perfect sense to experiment with new categories, and services is one of these things. We're seeing whether deals and services are attractive to our customers."

eBay has teamed up with startup Signpost, which arranges the deals with local merchants and posts them on a new section of eBay's online marketplace, http://www.ebay.com/exp/lifestyle-deals.

"Signpost is a merchant, just like merchants selling physical goods on eBay," Wenig said. "A merchant may sell local or even global services on eBay in the future."

BIA/Kelsey, which tracks the local media industry, expects U.S. consumer spending for online deals to reach $5.5 billion by 2016, up from $1.8 billion last year. That includes daily deals, and other discounted online sales channels, such as product deals and flash sales.

Groupon CEO Andrew Mason has estimated that the total local-commerce market world wide is worth $3 trillion.

Groupon started the daily deal craze in late 2008 and quickly grew into a company with thousands of employees and well over $1 billion in annual revenue.

That growth attracted a lot of deep-pocketed rivals, such as Google, Amazon.com and Facebook. However, growth has slowed recently as consumers tired of endless deals from multiple providers. Facebook shelved its first effort in the market last year.

Groupon shares have lost about three-quarters of their value since the company went public last year.

However, Google and Amazon have stuck with their daily deal businesses.

Groupon's business is easy to enter, but difficult to grow profitably, Bhatia said.

Groupon employs thousands of sales people who negotiate discounted offers every day, a costly operation. In contrast, Google Offers and AmazonLocal use other deal providers to do that legwork, and eBay is taking the same approach with its test.

"For eBay, local commerce is very important; they already run "daily deals" on their Marketplace website, so extending this to local merchants and adding services to the mix is not a stretch," said Colin Sebastian, an analyst at R.W. Baird.

"They can leverage their existing user base and provide a new distribution channel for merchants," he added. "It would be another thing if they added a significant number of salespeople, similar to Groupon, but I don't believe that is the case here."

Wenig and other eBay executives unveiled a big website redesign on Wednesday that includes a new "Feed" service which makes product suggestions on a consumer's eBay home page, based on their shopping history.

Feed also lets consumers tailor their eBay pages. For example, a user can have the feed automatically add a hard-to-find record by a favorite band, or the latest item available from an eBay seller by a favorite designer.

The feed has a "follow" feature reminiscent of Facebook's "like" function, which sends related updates to users' News Feeds. eBay's Feed service, which is optional for users, launched on Wednesday on eBay's U.S. site, with sites in other countries to follow.

"E-commerce is either utilitarian, where you can do a lot of business quickly, or engaging. We think the future is doing both," Wenig said. "Today is our opening move in this direction."

The site changes will be introduced in coming weeks in the United States and in coming months overseas.

Facebook's early efforts to expand in e-commerce, known as f-commerce, have had mixed results. However, the social network is sticking with the initiative, because it is such a big opportunity.

Facebook users share a lot of information about themselves and this can be useful for retailers and merchants because they may be able to get a sense of what consumers are planning to buy.

eBay also introduced other changes to its site on Wednesday, such as linking a customer's eBay and PayPal accounts to speed up and simplify checkouts. The site will also have bigger photos.

"However, in the near term, with eBay rolling out changes during the key holiday shopping period, we note there could be a modest short-term impact as users calibrate to the changes."

The company is also launching a smartphone and tablet computer app called eBay Now. The app lets people order items from retailers such as Macy's, Target and Walgreens. In most cases, eBay promises delivery within an hour. eBay Now is being tested in San Francisco but the company will likely roll it out elsewhere in the future.